KentuckySB 502026 Regular SessionSenateWALLET

AN ACT relating to the disposition of property.

Sponsored By: Brandon J. Storm (Republican)

Signed by Governor

Local MandateBanks And Financial InstitutionsBonds Of SuretyChildren And MinorsCircuit ClerksCounty ClerksCourts, DistrictFiduciariesMotor VehiclesReal EstateSheriffsShort Titles And Popular NamesTaxation, Inheritance And EstateUniform LawsWills, Trusts, And Estates

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43 provisions identified: 25 benefits, 2 costs, 16 mixed.

Transfer a car on death, no tax

Beginning January 1, 2028, you can name a beneficiary on your vehicle title. After you die, the beneficiary gets a new title by showing a death certificate, handling current ad valorem taxes, and paying the title transfer fee. The transfer skips probate. These transfer-on-death vehicle transfers are exempt from the state motor-vehicle usage tax. You can revoke by selling the vehicle or filing a new form; a beneficiary can disclaim.

Trust decanting protects taxes and benefits

When moving assets to a new trust, the law protects key tax results. It bars changes that would lose charitable or marital deductions, the gift-tax exclusion, a zero GST inclusion ratio, or grantor-trust status. It also bars changes that force larger required minimum distributions from retirement assets. A special-needs fiduciary may decant into a special needs trust if it furthers the first trust. A trustee may move the trust’s main place of administration with at least 60 days’ notice; any qualified beneficiary can stop the move by timely objection.

Daily fines for late estate filings

If a fiduciary fails to file a required inventory or account after notice and without good cause, the court fines $100 per day. The fine keeps adding each day until the filing is made.

New qualified trust rules and safeguards

The law creates qualified trusts and qualified dispositions that must use Kentucky law, be irrevocable, and block transfers of a beneficiary’s interest before payment. Only qualified trustees may serve; a transferor and nonresident individuals cannot be qualified trustees. Before funding a qualified trust, the transferor must sign a sworn qualified affidavit with required statements, including no intent to defraud and no planned bankruptcy. A transferor may name advisors, including trust protectors, and may also serve as investment advisor. If a qualified trustee stops qualifying, a named successor or a Kentucky court fills the role. If a court refuses to apply Kentucky law to a spendthrift clause, the trustee stops and a successor takes over. These rules apply only to transfers made on or after the law’s effective date.

Trusts still must pay support and prior debts

Qualified trusts and transfers are not shielded from certain debts. Past‑due child support, past‑due spousal maintenance, marital‑property division debts, and valid notes, mortgages, or security interests that existed before the transfer can be enforced. A trustee faces these claims only after a final, nonappealable ruling that the debt is past due and after reasonable collection attempts elsewhere or a finding that attempts would be futile.

New inheritance and spouse share rules

If someone dies without a will, the spouse gets 100% of the probate estate when there are no descendants or all are also the spouse’s. The spouse gets 50% if the decedent has descendants who are not also the spouse’s. The spouse also has a life estate in one-third of certain real estate and an outright half of the decedent’s surplus personal property. Surplus now counts many nonprobate assets, like payable-on-death, transfer-on-death, retirement accounts, joint-with-survivorship property, and some trust assets the decedent could revoke or control. Gifts under two years before death count as surplus; gifts made two or more years before do not, with limited exceptions. The spouse’s share is reduced by funeral costs and by life insurance paid to the spouse or a spouse’s trust (valued under federal rules). A spouse can sue people who received surplus property to satisfy the spouse’s claim. Stepchildren are included in certain kinship orders, and if no qualifying kin exist, the estate goes to the state.

More flexible trusts and special-needs planning

Trusts can name a director with a power of direction, and joint directors act by majority unless the trust says otherwise. Trustees can decant a trust into a new trust even if no distribution was due, and the law cures illegal or missing clauses in the new trust. The new trust may last longer or shorter, but property from the first trust keeps the old perpetuity and accumulation limits; the original settlor is treated as settlor of the decanted portion. For a beneficiary with a disability, the new trust may be a pooled trust or include Medicaid payback terms so the person can keep Medicaid; other beneficiaries must get substantially similar interests. These administration and director rules apply to trusts whose main administration is in Kentucky, and for older or moved trusts they apply only to actions on or after the relevant date.

Short deadlines and fewer creditor remedies

Creditors generally cannot reach property in a qualified trust unless they sue under the voidable‑transactions law and prove actual intent to defraud that creditor. Existing creditors must sue by the later of two years after the transfer or six months after discovery; later creditors have two years from the transfer. Discovery happens when a public record shows the transfer, and the creditor must prove intent by clear and convincing evidence. A transferor keeps only the powers written in the trust, earlier valid liens still attach, and some timing rules favor earlier transfer dates. When there are multiple transfers, payouts are treated as from the latest one.

Skip probate when exemptions or debts paid

The court can skip full administration and transfer assets to the spouse or, if none, the children or a designee when the spouse/children’s exemption plus preferred claims paid are at least the distributable assets. The court may order no letters if nothing will pass through a personal representative. The court can also transfer assets to a preferred creditor or person who paid preferred claims when the spouse/children waive or there are none. The law defines the applicable exemption and preferred-claim lists. Beneficiaries can also skip administration by written agreement when there are no debts, creditor ads ran for 6 weeks and were published, taxes are provided for, and all required signatures are filed under penalty of perjury. If a trustee is named, the court confirms the trustee to collect claims like an administrator.

Stronger creditor shields for trusts

Creditor attacks on a qualified transfer are limited to what is needed to pay that specific debt and court‑approved costs. A trustee who acted in good faith gets a first lien on the property for proper defense costs. A valid spendthrift clause counts in bankruptcy, limiting a debtor’s creditors from reaching the trust interest. A trust stays qualified and not revocable even if the creator keeps certain powers or gets up to 5% of the trust’s initial value each year.

Stronger rules when trustees decant trusts

The law sets guardrails when a trustee moves assets to a new trust (decanting). A new trust cannot add new current beneficiaries or cut vested shares, and it must keep any charitable gift and purpose. A trustee must follow any written ban or limit in the original trust, and cannot raise pay, cut liability, or change who can remove the trustee without all consents or a court order. If the change would switch grantor‑trust tax status, a settlor’s signed objection during the notice period blocks it. Notice and representation rules apply, and Kentucky treats the decanted “second trust” like any other trust instrument. For charitable trusts, Kentucky law controls unless the Attorney General consents or a court approves.

More tax options when decanting trusts

When a trustee moves assets to a new trust (decanting), the new trust can be set as a grantor or a nongrantor trust, even if the old trust was the opposite. This gives more ways to plan income-tax results. Limits still apply for S‑corporation stock and when settlor‑objection rules apply.

Easier local buying and energy savings

Local governments can join state price contracts with approval, while following bidding laws if needed. The Cabinet must alert the Department for Local Government and set rules so added costs are covered. The energy‑efficiency program requires engineering reviews, caps monitoring at 5%, and lets agencies use guaranteed savings contracts when general funds are not available. Those contracts guarantee savings to repay costs, and any extra savings stay with the agency. Agencies must also keep property maintained and secure until a sale or transfer is complete.

Adoption privacy, health info, and inheritance

Adoption judgments in the public record show only the adoptive parents’ names and the child’s new name. By finalization, the agency must give adoptive parents and the court a written nonidentifying health and background history, including known HIV and hepatitis test results. As an adult, an adopted person can request this nonidentifying history; identifying details stay sealed unless the law allows. For inheritance, an adopted child is treated as the petitioners’ child only if the child was adopted and lived in the petitioners’ household before age 18.

New probate bond rules and simpler filings

If beneficiaries ask to skip full administration, the court can require a surety bond equal to the personal estate to protect creditors for six months. Fiduciaries who must post a bond must file a notarized bond with the county clerk. A named executor can leave heirs’ names off the appointment filing unless the court asks. The law broadens what counts as a will, including codicils, executor appointments, and limits on intestate rights. It also adjusts how state e‑signature rules interact with the federal E‑SIGN law and does not allow certain notices to be sent electronically.

New rules for changing trusts

The law lets trustees move assets from one trust to a new trust (called decanting). It explains when this is allowed with broad or limited discretion, and it can cover only part of the principal. A new trust can use another state’s law, change certain powers of appointment, and split trustee duties among advisors or protectors. Boilerplate no‑amendment or spendthrift clauses do not block decanting, but any express ban in the original trust must be carried over. Debts and creditor claims still follow the property after a move, and later‑found assets go to the right trust based on whether all or part of the principal was moved. If several new trusts are created, they are treated as one when checking if a charity’s interest is reduced. These rules apply to trusts run in Kentucky or that choose Kentucky law, and key tax terms are defined.

Electronic wills and estate papers allowed

Electronic estate-planning documents and signatures now have legal effect. You may use electronic notarization, oaths, and remote witnessing for nontestamentary documents. For an electronic will, the testator signs and two witnesses must be Kentucky residents who are physically in Kentucky at signing. Witnessing for nontestamentary documents can be in each other’s electronic presence.

Probate filings and will handling changes

Applicants for personal representative must file a sworn application listing the spouse and known heirs, addresses, and other details, plus a separate confidential asset disclosure. Nonresident applicants must name a local agent for service. The clerk sends the application and disclosure to the state tax department. A probated will can be recorded in other counties with attested copies. For wills recorded on or after January 1, 2027, the clerk waits at least two years before returning the will; older recorded wills have a ten-year rule. Starting January 1, 2028, after probate the court clerk collects the will filing fee and tax and sends them with the order to the county clerk.

Rules for trusts with S-corp stock

If a trust owns S-corporation stock, a trustee may move that stock only to a new trust that is an allowed S‑corp shareholder. If the first trust was a qualified Subchapter S trust, the new trust must keep that status. These limits protect pass‑through tax treatment but reduce decanting choices.

Clearer rules for how trusts run

The law clarifies what counts as a trust’s terms, including clear settlor intent, some trustee or court changes, and certain settlement agreements. A chosen main place of administration is valid when the trustee or trust director is based there, or administration happens there. For revocable trusts, when the trustee reasonably believes the settlor has capacity, the trustee may follow the settlor’s directions. Cotrustees must take part and act to prevent or fix breaches, and statutory terminations get the same notice and claim‑bar effects as terminations under the document. Some powers are excluded from directed‑trust rules, the trustee’s good‑faith duty follows new sections, and older, overlapping trust statutes are repealed.

Court care for minors without guardians

When a minor has no named guardian and no one will serve, the court gives care of the child and the child’s estate to the public administrator. The public administrator must be sworn and post a bond with good surety, which then covers every estate they handle. A public administrator has the same powers, duties, and liabilities as a private administrator, and the court can later replace them.

Easier informal and proposed settlements

If the fiduciary is the sole beneficiary, the court can accept an informal final settlement when the estate is solvent, all debts and taxes are paid or provided for, court costs are paid, attorney info is listed, and the share is received. An informal final settlement may be filed after 6 months if all non‑disabled beneficiaries sign verified waivers; any beneficiary can first ask for an accounting. A nonresiduary legatee who already got a legacy may provide a receipt or canceled check instead of a waiver. A fiduciary can also file a proposed settlement before the final one. They must mail certified notices to beneficiaries at least 20 days before the hearing. The proposal lists expected assets and planned distributions; backup documents are only required if the court orders them after objections. If there are no valid objections and it follows the law, the court approves it.

Electronic wills allowed with clear steps

The law recognizes electronic wills. An electronic image of a handwritten signature counts, and courts may use outside proof to show a record was meant as a will. A later will can revoke an earlier one, and a physical act to revoke needs clear and convincing proof of intent. You can make an electronic will self‑proving with a notary and witness affidavits, and submit a certified paper copy sworn under penalty of perjury.

Faster court sign off on estate accounts

After the court approves a proposed settlement, the fiduciary must pay out as ordered and file proof. If the filed account matches the order, the judge confirms it without another hearing and, if final, discharges the fiduciary. New evidence at the hearing is recorded; a confirmed settlement in the record counts as prima facie proof. You have 30 days from the order to sue in Circuit Court. Each year the judge checks bond sureties and can require new security or remove a fiduciary. If a commissioner handled the account, the court file must include receipts, payments, and distributions.

Pet trusts: clearer change rules

A protector can consent to change (decant) a pet trust. Each animal is treated like an individual for the test. The protector has rights like a qualified beneficiary, and the new trust must use funds only for the animals’ intended care during the covered period.

Public administrators and curators safeguard estates

Each county court appoints a public administrator to handle estates with no representative and to act as guardian for orphans with no guardian. After 60 days, if no one suitable is available, the court must order the public administrator to serve. If there is no public administrator, the court appoints a private administrator. The court can also appoint a bonded curator to collect and protect an estate during a probate fight or when an owner has been missing for a year.

Quicker probate with clear notice

After the will and papers are filed, the judge decides if a hearing is needed. If the spouse and all known heirs sign a waiver, no hearing is required. When a hearing is set, written notice must be mailed at least 5 days before, with proof filed at the hearing. Parties can waive notice in writing, and a minor 14 or older can waive by appearing. For very small estates under $5,000, the court may skip notice rules.

Who can direct a trust

The law defines a “power of direction” held by someone who is not serving as trustee. A person with that power is a “trust director,” even if the document uses another label. Courts also use common‑law and equity rules alongside these statutes unless another law changes them.

Electronic estate records now count

Electronic estate-planning records (not wills) are valid to keep, send, copy, and file if they show the final info and stay accessible. A proper electronic record can satisfy a rule to keep an “original.” You can use a service to store it and do not need to keep data used only to send it. You may make a sworn paper copy from an electronic document. Courts cannot reject these records or signatures just because they are electronic. These rules cover electronic records made before, on, or after the law’s effective date.

Annual report on state energy savings

Each year by October 15, the Finance and Administration Cabinet reports on energy‑saving steps in state buildings. The report lists projects, installed measures, energy use and spending, expected first‑year savings from ENERGY STAR products, and funding needs.

Better court records and library support

Court clerks must tell the Cabinet when adoptions are granted, changed, denied, or dismissed. The state law librarian can share or dispose of materials, help county law libraries, and buy for them using those libraries’ funds. The law also updates a definitions cross‑reference to make court and legal references clearer.

Electronic wills and estate documents allowed

An electronic will counts the same as a paper will in Kentucky. Kentucky also recognizes some out‑of‑state electronic wills if they met that place’s law. These rules apply to estates when a person dies on or after the law’s effective date. The law also defines and accepts many electronic estate documents, like trusts, powers of attorney, and advance directives, unless a document says not to use electronic records. Courts should interpret these rules to match other states with similar laws.

State Law Library can sell books

The State Law Library may sell surplus books with approval and keep the money in a nonlapsing fund. The librarian can use the funds to buy new books and materials.

Clerk fee splits and $10 records fund

For $33 recordings, $27 stays with the county clerk and $6 goes to the Affordable Housing Trust Fund. For $63 mortgages (up to 30 pages), $57 stays with the clerk and $6 goes to the Trust Fund. Clerks get $10 per qualifying permanent-storage service. In listed local governments, the $10 is held in a separate, non-lapsing fund for clerk technology, staff (including overtime), cloud storage, and cybersecurity, with monthly transfers and an annual report due by July 1. Starting January 1, 2028, courts collect and forward the name-change filing fee and order to the county clerk.

Recording-tax dollars fund local records

Beginning January 1, 2028, one dollar from each covered recording tax goes into a fund at the Department for Libraries and Archives. The Department sets aside 90% for yearly grants to county clerks. If clerks do not apply for enough, the Department can grant the rest to other agencies. This provides steady support for local records work.

New $4 fee to record wills

Beginning January 1, 2028, recording a will costs $4, collected by the county clerk when you file. The clerk sends the money to the Kentucky Department of Revenue within 10 days after each month ends. This charge applies to each will that is recorded.

Clear notice rules for estate hearings

The clerk must publish notice at least 10 days before a settlement hearing. The notice must list the fiduciary, trust name, account type, and hearing date, and say exceptions are due before the hearing. With court approval, the fiduciary may mail written notice to all unpaid creditors and distributees at least 10 days before the hearing and file an affidavit. The cost of notice is charged as a case cost. Very small estates or trusts of $2,500 or less with funds held in a court‑controlled account do not need to publish or mail notice.

New rules to qualify executors

A named executor cannot act until the will is admitted, any required bond is posted, and the oath or declaration is filed. The oath/declaration lists duties like keeping funds in Kentucky accounts, separating estate money, filing taxes, carrying insurance, and obeying court orders. The court can require a surety bond in some cases; the bond’s cost can be charged to the estate. Bonds must be notarized, approved, and filed, and some people (like judges and court clerks) cannot be sureties. If the will directs it, a minor executor may qualify and may have to post a bond.

Notice and court rules for trust changes

Before a trustee decants, the trustee must give written notice at least 60 days ahead, unless everyone entitled to notice signs a waiver. Representatives can receive notice and bind others, and the Attorney General protects charitable interests. The trustee must make the change in a signed record and act in line with fiduciary duties and the trust’s purposes. Courts can approve, reject, or guide a decanting. People who reasonably rely on a valid trust change are protected from liability. These sections do not take away the Attorney General’s other powers.

Regular estate accountings and final reports

Most fiduciaries must file an accounting two years after appointment and every year after, until all assets are distributed and all debts, fees, and taxes are handled. Each filing must list assets and values, and document all receipts and payments. The court or an interested person can require a filing at any time for good cause. A final settlement must show who got what, list unpaid creditors (allowed and disallowed), display fiduciary and attorney fees, and address any inheritance or estate taxes. Noncorporate fiduciaries must show the court the securities or a bank certification before approval. The clerk records approved settlements. Guardians and conservators of mentally disabled persons may be required to account and must follow Chapter 387 reporting.

Tighter estate reporting and recovery

A personal representative must file an inventory within 90 days; it is sealed, and a copy goes to the state tax department. They must amend it when new assets are found. The court can order people to disclose and turn over estate property; the representative must report recovered property within 20 days. Clerks report late filers monthly, and judges can set deadlines, remove fiduciaries, fine them, or deny fees. A successor can sue a former personal representative and their surety for losses from bad administration.

New lease terms for Capitol Annex

The Finance and Administration Cabinet and the Legislative Research Commission must set building terms by a written agreement. It covers rent, utilities, maintenance, security, and janitorial work. The Commission can stop cabinet janitorial services with 60 days’ notice and hire its own, which lowers the rent and utilities rates.

New terms for state selection committees

Pool appointees to selection committees serve an initial one-year term, may be reappointed, and serve until successors qualify. Vacancies are filled the same way as the original appointment; the Auditor’s appointees follow the same rule. User agency appointees serve only for the project they were chosen for.

Sponsors & Cosponsors

Sponsor

Brandon J. Storm
Republican • Senate

Cosponsors

Robert Stivers
Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 150 • No: 12

House vote • 4/1/2026

3rd reading, passed

Yes: 78 • No: 12

Senate vote • 4/1/2026

passed

Yes: 36 • No: 0

Senate vote • 3/4/2026